Myriad Development, Inc. v. Alltech, Inc.
817 F. Supp. 2d 946
W.D. Tex.2011Background
- Myriad sues Alltech in WD Tex Austin for breach of three FEMA-related contracts and trade-secret misappropriation; APPRISE and AIMS agreements govern use/licensing of Risk Manager and PB Ace; Subcontract for Labor covers staffing under FEMA PRIME; trial produced findings of liability on multiple breaches and misappropriation; jury awarded various damages including a $2M exemplary award which court later denied; court must harmonize conflicting contract remedies under Texas law and Virginia law on a subcontract; final judgment grants partial recovery to Myriad and denies other damages, with specific allocations and interest.
- Myriad asserted six claims for breach of contract (APPRISE, AIMS, Subcontract for Labor), trade-secret misappropriation, unfair competition by misappropriation, unjust enrichment; Alltech asserted counterclaims for breach, conversion of AIMS source code and photographs, and related relief; the court granted partial summary judgment on damages, allowing certain categories; trial occurred March 2010 with a jury verdict finds mutual liability and awards; post-trial motions asked to conform the verdict to the evidence; the court grants in part, denies in part, and issues a final judgment detailing recoveries and exclusions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Remedies for breach under 14(b) vs 15(b) | Myriad argues 15(b) permits all remedies; 14(b) is not exclusive. | Alltech argues 14(b) exclusive for nonpayment defaults | Harmonized: 14(b) applies to material/default breaches; 15(b) permits other remedies; not exclusive overall. |
| Whether Myriad may recover lost profits under APPRISE/AIMS | Myriad may recover lost profits for breach. | Remedies under 14(b) exclusive; no lost profits after termination. | Myriad cannot recover lost profits for breach of APPRISE or AIMS; only unpaid amounts and royalty awarded. |
| Adequacy of unpaid amounts awarded under APPRISE | Unpaid amounts justified as damages. | Unpaid amounts double-counts/incorrect calculation. | Unpaid amounts limited to $21,263 under APPRISE; $0 under AIMS; $198,110 unpaid under Subcontract for Labor remains. |
| Reasonableness of $250,000 royalty for trade secrets | Royalty reflects value of misappropriated trade secrets. | Royalty unsupported or speculative. | $250,000 reasonable royalty upheld as damages for trade-secret misappropriation. |
| Exemplary damages (punitive) viability | Punitive damages warranted for malice. | No clear and convincing evidence of malice; implied malice not supported. | Punitive damages denied; no evidence of actual malice or implied malice supports exemplary damages. |
Key Cases Cited
- Continental Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444 (Tex. 1996) (malice standard for exemplary damages depends on statute's scope)
- Flores v. Millennium Interests, Ltd., 185 S.W.3d 427 (Tex. 2005) (Chapter 41 governance of exemplary damages; modern scope)
- Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1 (Tex.1991) (one-satisfaction rule / multiple theories of liability)
- Univ. Computing Co. v. Lykes-Youngstown Corp., 504 F.2d 518 (5th Cir.1974) (measures of damages for misappropriation; royalty vs loss profits)
- Tony Gullo Motors I, LP v. Chapa, 212 S.W.3d 299 (Tex.2006) (pleading multiple theories; election rule guidance)
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex.2003) (contract interpretation giving weight to operative clauses)
- Enter. Leasing Co. Of Houston v. Barrios, 156 S.W.3d 547 (Tex.2004) (contract interpretation; use of titles in interpretation)